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2024 (5) TMI 395

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..... ioner Company inasmuch as even though Section 70 of the Act was made applicable to the petitioner, it was the choice of the petitioner to seek for non-application of Section 10B by filing a declaration. Said position of law is not in dispute in view of the judgment of the Division Bench of this Court in Karle International (P) Ltd . [ 2020 (9) TMI 968 - KARNATAKA HIGH COURT] as held it is equally well settled legal proposition that where the assessee does not want the benefit of deduction from the taxable income, the same cannot be thirst upon it. There is no provision which makes compulsory on the part of income tax officer to make deduction in all cases. As the assessee has not filed any audit report in Form-56G which is a mandatory requirement for claiming deduction under Section 10B of the Act. Therefore, the deduction u/s 10B of the Act cannot be thirst upon the assessee. Thus the petitioner has chosen to file declaration for the relevant assessment years before the jurisdictional Income Tax Officer seeking that the Section 10B would not be applicable to the assessee. WP allowed. - HON'BLE MR. JUSTICE V SRISHANANDA For the Petitioner (By Sri A. Shankar, SR. Counsel for S .....

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..... in reasons to suspect without having any reasons to believe as contemplated under the provisions of section 147 of the Act. (1) And pass such other orders as this Hon'ble Court deems fit and proper in the interest of justice and equity. 3. Brief facts for disposal of the writ petition are as under: a) Petitioner is a Public Limited Company incorporated under the Companies Act, 1956 and it is in the business of manufacturing of bulk drugs and intermediaries and also owns windmill which generate the power. Petitioner intimated the Assistant Deputy Director, Cochin Special Economic Zone ( CSEZ for short), vide letter 25.03.2008 that petitioner being the 100% Export Oriental Unit (EOU for short) commenced its commercial operations on 21.03.2008. The Assistant Development Commissioner ( ADC for short), CSEZ, vide letter dated 04.06.2008 communicated to the petitioner about the permission issued for setting up of 100% EOU for a period of 5 years from the date of commencement of the production. The petitioner commenced its commercial production on 21.03.2008, the permission granted by the Assistant Development Commissioner, CSEZ, was valid for up to 21.03.2013. Petitioner further req .....

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..... (Karnataka) dated 07.09.2020 has specifically held that even if Section 70 of the Income Tax Act would be applicable for 100% EOU, the assessee can seek for exemption and therefore, exemption under Section 10B set of against the profit. Even though Section 70 would be applicable, when an assessee files a declaration, then Section 10B could not be invoked automatically and therefore, sought for allowing the writ petition. 7. Sri A. Shankar also submits that the Department carried the decision rendered by the Division Bench in Karle International (P) Ltd., case to the Apex Court and the Hon ble Apex Court dismissed the Special Leave Petition filed by the Department and thus, the law with regard to the non-application of Section 10B even though Section 70 of the Act is applicable to the 100% EOU has been settled. 8. Per contra, Sri M. Thirumalesh, learned counsel, for the respondents however tried to distinguish the case on hand on facts even though he could not dispute the position of law rendered by the Division Bench of this Court in case of Karle International (P) Ltd., referred to supra. 9. This Court in the light of the rival contentions perused the material on record meticulou .....

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..... income of the assessee of the previous year relevant to the assessment year immediately succeeding the last of the relevant assessment year, or of any previous year, relevant to any subsequent assessment year- (i) xxxxx (ii) no loss referred to in sub-section (1) of Section 72 or sub-Section (1) or sub-Section (3) of Section 74, in so far as such loss relates to the business of the undertaking, shall be carried forward or set off where such loss relates to any of the relevant assessment years ending before the 1st day of April 2001. Section 70(1) Save as otherwise provided in this act, where the net result for any assessment year in respect of any source falling under any head of income, other than Capital gains , is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head. (2) Where the result of the computation made for any assessment year under Sections 48 to 55 in respect of any short-term capital asset is a loss, the assessee shall be entitled to have the amount of such loss set off against the income, if any, as arrived at under a similar computation made for the assessment year in respect of .....

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..... only after set off of business loss against the business income in the year as per provisions of Section 70 of the Act. Section 10A of the Act is a code by itself and it is pertinent to note that Section 10A (6)(ii) does not preclude the operation of Sections 70 and 71 of the Act. Para 5.2 of the Circular issued by the Central Board of Direct Taxes dated 16.07.2013 clearly provides that income / loss from various sources i.e. eligible and ineligible units under the same head are aggregated in accordance with provisions of Section 70. 8. It is equally well settled legal proposition that where the assessee does not want the benefit of deduction from the taxable income, the same cannot be thirst upon it. There is no provision which makes compulsory on the part of income tax officer to make deduction in all cases. (See: 'COMMISSIONER OF INCOME-TAX Vs. MAHINDRA MILLS' (2000) 243 ITR 56 (SC). From the return of income for the assessment year 2008-09 in Schedule BP, Sl. No. 35(iii), the assessee has shown the deduction under Section 10B of the Act as zero. Similarly, at Sl. No. 57 the assessee has filed the deduction under Section 10B as not applicable. Thus, from perusal of retu .....

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